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voting down the reports. Unfortunately that would not mean the end of poll tax but--and I hope that this is of interest to Conservative Members--the Secretary of State would be obliged to return to the House with more acceptable proposals, having been strengthened in his battle with his own Cabinet colleagues.We shall vote in the Lobby against the revenue support grant and revenue support grant distribution order reports. I hope and believe that the House will unite in attempting to improve the prospects for millions of people who are terrified by what they face. I hope that the House will unite by joining us in the Lobby this evening. 5.54 pm
Mr. Teddy Taylor (Southend, East) : One of the joys of being a member of an Administration led by my right hon. Friend the Member for Finchley (Mrs. Thatcher) is that it introduces many reforms and resolves problems that have existed for a long time. Every reform is unpopular and meets with resentment and opposition. People often fear that a reform will work against their interests. If we look back at some great reforms--those made in industrial relations are among them--it can be seen that complaints faded away when they were put into practice. Many of the trade union leaders who objected most strongly to industrial relations reforms acknowledge that responsible trade union leaders can now exercise more power because they are free from the control of Left-wing loonies, district committees, and so-called mass meetings--although they are not mass meetings in any normal sense.
Under a reform such as the community charge, some people will gain, while others will lose. The hon. Member for Dagenham (Mr. Gould) understandably pointed out that some ratepayers will pay more in future, but he surely accepts that the average business or commercial enterprise in Britain will not pay a penny more because of the change, and in future will be protected from the violent inflationary increases imposed by some local councils in the past. For business and commerce generally, the uniform rate represents a good deal and a great step forward.
One of the problems of reforming legislation is that the large number of complaints it prompts are met by concessions. My right hon. Friend the Secretary of State is under huge pressure to make concessions to all kinds of organisations which want to see a return almost to the status quo. It is like this House passing legislation to abolish alcohol but then excluding five categories of consumers--including, as always, farmers--and allowing drinking between 5 o'clock and 7 o'clock in Scotland. If changes are repeatedly made, the principle behind the new tax will be destroyed.
Some of the concessions made by my right hon. Friend will mean that Southend borough council, which has under different parties operated extremely efficiently and is a low spender, will have to charge its ratepayers an extra £67 per person because the benefits that it hoped to enjoy are being undermined by the transitional relief arrangements. The benefits offered by the poll tax that a low-spending council such as Southend should enjoy are being held back because of the concessions made to other areas. To that extent, I hope that my right hon. Friend the Secretary of State will exercise great caution before
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making further concessions to those of my right hon. and hon. Friends who are concerned about the effects of the reforms. I ask my right hon. Friend to consider also two other matters. The effects of the new business rate on certain shops in London will be horrific. Shops in some parts of the country will gain but those in London- -and even some shops in Southend, where the increase in the general business rate will be hardly anything--will be hit badly. Perhaps my right hon. Friend will reconsider whether the 20 per cent., 26 per cent. or 29 per cent. rate could be lower.As to rebates, I find it difficult to explain to constituents who are married or who are living together why the £8,000 saving that is allowed in respect of a single person is applied also to a couple. That seems very strange, particularly when compared with the situation of a mother and daughter living together--who are treated differently from a husband and wife living together.
I assure my hon. Friends, who understandably have deep worries about the proposals, that if by any chance the orders are voted down tonight, there would be resentment in Scotland of a kind that we have not seen for a long time, and it would be fully justified. I get the impression that people in Scotland are not just concerned about cash spending. They think that hon. Members in England are not concerned about their welfare, and that they do not show the same attitude towards Scotland as they show to their own country and their own contituencies.
The community charge has been working in Scotland for some time, and the Scots face exactly the same problems that we are worried may arise in England during the next year. If right hon. and hon. Members who voted for the community charge in Scotland--not one Conservative Member voted against it, although there were three Conservative abstentions--vote against its being applied in England because they are worried about its implications, it could undermine the basis of the Union.
We live in the United Kingdom, and we have a genuine obligation to treat every part of the country in the same way. Hon. Members may say that we have learnt from the way that the charge is working in Scotland, and we now have the figures for our constituencies. However, that would give credence to the belief that Scotland was used as a scapegoat to try out the measure before it was introduced in England, and that is not the case. The Secretary of State for Scotland--who works so hard for that country-- thought that it might be helpful if the new charge was introduced there after the rate revaluation. The Conservative party believes in the United Kingdom, and I hope that my right hon. and hon. Friends, who want to maintain that unity, will realise that we are not simply discussing whether one area will pay £50 more and another area £60 less, or what the Gallup polls will say next week. Something more significant is at stake.
If a party that almost unanimously supported a measure to apply the charge in Scotland undermines the charge in England, without a great deal of discussion and thought, the party would let down democracy throughout the United Kingdom, and we all believe in democracy.
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6.2 pmMr. A. J. Beith (Berwick-upon-Tweed) : I think that what the hon. Member for Southend, East (Mr. Taylor) has just said is that, if one makes a ghastly mistake once, one should make it again. People in Scotland would be delighted to see the charge removed in England, and would hope that its removal in Scotland would follow.
It is not the merits of the poll tax that are at issue tonight, but the arrangements that the Government have made to bring it in. There are better alternatives to poll tax. Frankly, even the rating system begins to look attractive when compared to some of its deficiencies. A proper local income tax would be a better alternative.
The poll tax is unfair to individuals, and that unfairness will be multiplied by the deficiencies that have been shown up during the debate. Average earners will pay the same amount as the Duke of Westminster, Richard Branson or the Prime Minister and her husband. That is absurdly unfair.
Worse than that--the Government have pegged relief for the worst-hit individuals and households at a wholly imaginary level of what the poll tax might be. The Government have set that level, and the promise that initially individuals and households will not pay more than £3 a week will not be realised because there will be a huge gap, throughout the country, not just in Labour-controlled areas, between what the Government say the poll tax will be, and what it actually will be.
The standard spending assessment is the fundamental reason for that gap. What an extraordinary title--it suggests that an official from the Department of the Environment has gone round the country, interviewing everybody, to work out which services are needed, and how much it would cost to administer them in each area. Of course that has not happened. A few statistics have been thrown around by the Department. They cover only a handful of the services that local authorities provide at the moment. Some averaging out has been done, and a figure has been plucked out of the air, after a grossly simplified exercise that bears no relation to the real costs of administering those services.
Among the extraordinary features included in the arrangements is an assessment that clearing snow will cost more in Brent than it will in Cumbria.
The Minister for Local Government and Inner Cities (Mr. David Hunt) : The hon. Gentleman is sadly out of date. That is not correct and ihe reflects on the figures he will see that it is not the case. Many recommendations have been made about a different way to deal with snow clearance in highway maintenance, and they were accepted. Will the hon. Gentleman please look at the new figures, rather than figures that are some eight weeks out of date?
Mr. Beith : I know that the Government got the same figures completely wrong for Northumberland. They have revised the snow clearance figure and we are glad of that, but it is absurd that they got it so wrong in the first place.
What is more important in relation to the figures, is that inflation is not running at 4 or 5 per cent., but at twice the level that the Government had assumed when they first devised the figures. Each 1 per cent. by which they mistake the inflation figure adds £9 to the poll tax paid by an individual.
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Each poll tax payer in Northumberland will pay £80 more than the Government's original forecast, before rebates, because of the failure to allow for the real level of inflation, and how it affects council services, and because of other mistakes and miscalculations in the measurement of spending. Those factors will push up the poll tax in areas such as Berwick.Local authorities cannot prevent that unless they sack teachers or fail to honour the pay awards for the education, police and fire services. When local authorities study the figures, as they have done in Berwick, they are completely mystified. For example, Teesdale has a higher standard spending assessment than Berwick although, in nearly every way, the two authorities are exactly comparable--for example, in the size of population and its sparsity, and in other rural characteristics.
In many cases the figures are clearly absurd. The East Yorkshire borough council's figures are out of line with all comparable surrounding authorities.
How can the Government insist that everyone in local government has got it wrong and that they have got it right? The Chartered Institute of Public Finance and Accountancy has criticised the figures. The Select Committee on the Treasury has pointed out that the figures are dubious, although they are the only figures that it can use. Conservative local authorities, Conservative councillors throughout the country and the Conservative- controlled Association of District Councils--of which I am the vice- president, a post which carries no salary or fee--says :
"The Association emphatically rejects the proposition that the DOE's notional figures for Community Charge, based on their assumptions, represent what the charges would be, if authorities continued to provide services at the present level."
That body includes members from all political parties, although it is dominated by the Conservative party, and it knows that the figures are wrong.
Local authorities cannot meet the poll tax figures put forward by the Government without cuts, which is not what the electorate wants. One is bound to ask whether that is incompetence on the part of the Government, or a cynical device to limit the amount of relief that they have to pay, under the transitional relief scheme. Or is it a confidence trick? Are they advertising a product at a price at which no one can offer it? If that happened in the marketplace, the Government would attack and criticise it, but that is what they have done. They have said to poll tax payers in Britain, "It's all right, you only have to pay so much." However, they must know, because of all the representations that they have received, that their prophecies will not be fulfilled anywhere in the country. Are the Government asking local authorities to sack teachers or not to honour the police pay agreement and not to pay their own staff the nationally negotiated rates? Only the most drastic cuts will enable many local authorities to meet the poll charge figures that have been put forward.
Mr. David Hunt : I am not sure whether the hon. Gentleman is arguing that there should be no controls at all on local government spending. Perhaps he could clarify that. Surely there must be some protection for individual charge payers, as there has been for individual ratepayers in the past. Why, for instance, does the hon. Gentleman think that the Liberal -controlled Isle of Wight council
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decided in 1986-87 to increase spending by 20 per cent.--far more than the rate of inflation? It has never justified that increase.Mr. Beith : The mechanism for controlling local government spending is called the ballot box. It enables voters to vote out councils that pursue policies that they do not like. That is supposed to be the essence of what the Government are doing, but the system that they have devised does not achieve their aim. I might add that the electors of the Isle of Wight showed confidence in what their council had done by voting it back into office after it had improved the quality of its services.
The safety net provisions have added to the confusion. People whose local authorities provide a lower level of service--many of them not well off-- must, in the first year, contribute money to keep the poll tax down in other authorities with higher levels of service. That is evident in Northumberland and other areas.
The Secretary of State opened his speech by saying that it would be clear to everyone that the level of poll tax reflects the spending policy of local councils. Will anyone seriously be able to say that after today's debate? The Secretary of State knows perfectly well that it is not true. The level of poll tax will reflect Government decisions on standard spending assessments ; it will reflect safety net provisions ; and it will reflect the endless mistakes and miscalculations on the part of the Department of the Environment.
Mr. Beith : The Secretary of State was not in the Chamber a moment ago when I did name one. His hon. Friend the Minister for Local Government and Inner Cities rose to point out that the mistake about snow clearance had been corrected. Another obvious mistake was the one related to inflation : the present inflation rate is very much higher than it was when the calculations were made.
The Government's published poll tax figures are a cynical exercise in pretending that local public services could be run at much lower cost if the Secretary of State himself controlled every local authority in the country. Conservative-controlled councils and Conservative councillors around the country tell him that that is not so, and we all know that it is not so. The right hon. Gentleman has left the councils with a choice between a squalid collapse of the services on which our children's education, our environment and our law and order depend, and castigation by him for overspending. Unless Conservative Members realise the folly of it all this evening, a grossly unfair tax will be made even more unfair by the way in which it is being brought in. That has already done irreparable damage to the future of the Tory party in Scotland ; it will do the same in England, as I believe at least some Conservative Members have come to recognise.
6.12 pm
Sir Ian Gilmour (Chesham and Amersham) : The hon. Member for Dagenham (Mr. Gould) certainly found a brilliant solution to Labour's policy-making difficulties : to have no policy at all, and to say magnanimously that if and when he had a policy we would be allowed to discuss it. That strikes me as marvellous technique, and I recommend it to some of his shadow Cabinet colleagues.
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My right hon. Friend the Secretary of State opened the debate in a masterly way, and I think that the whole House will agree that any deficiencies that Government policy may contain should not be laid at his door. He and my hon. Friend the Minister for Local Government had a very ugly and unwelcome baby planted on their doorstep, which was certainly not their fault, and they have already done their best to make it slightly more acceptable.I want to stick to the general point, but perhaps I could illustrate it by means of a local example. As my hon. Friend the Minister for Local Government and Inner Cities has told me, Buckinghamshire, being a rich county, has done very well out of the new system, obtaining an increase of some 30 per cent. in its external finance. The capital guidelines, however, show us something very different. Buckinghamshire has much the same population as Cambridgeshire and is growing in much the same way ; its capital expenditure in the current year is only a little less than Cambridgeshire's. According to the guidelines, however, Buckinghamshire is one of the six counties that will experience a reduction--the biggest, in fact, of 24 per cent.--while Cambridgeshire will receive an increase of 55 per cent.
As a result, while the present position is one of approximate parity, next year Cambridgeshire will receive nearly two and a half times as much as Buckinghamshire. Already, serious cuts have had to be made, particularly in education spending. I realise that the Department of the Environment is only the umbrella Department, but it is nevertheless the Department holding the umbrella. My right hon. Friend the Secretary of State for Education and Science has spoken of the importance of his capital projects, and of giving more to places with higher populations. Those criteria certainly apply to Buckinghamshire, but, while general LEA expenditure is rising by 38 per cent., that of Buckinghamshire is falling by 42 per cent. Such examples demonstrate, surely, that there is little reason in the system.
On Second Reading of the Local Government Finance Bill, I opposed the whole system, and voted for the amendment tabled by my hon. Friend the Member for Hampshire, East (Mr. Mates). Since then, along with many of my hon. Friends, I have stayed away from debates on subsidiary legislation : we thought that we would let the Government get on with it. We have now reached what could be described as the final coping stone--hardly a triumphal arch, but the last bit of a stone wall into which we shall all be walking, bumping our heads and barking our shins, for some time ahead. In those circumstances, I felt that today's debate required different considerations. My hon. Friends and I opposed the original legislation
Mr. Teddy Taylor : In England.
Sir Ian Gilmour : In England. I am happy to tell my hon. Friend that I abstained on every part of the Scottish legislation. My hon. Friends and I opposed the original legislation on four main grounds. The first was the obvious ground that the tax is wholly unfair. That is obvious from its name, apart from anything else : a Government who were doing something fair and sensible would not need to come up with an Orwellian euphamism line "community charge" ; they would simply say, "A poll tax is a poll tax is a poll tax," as Gertrude Stein might have said.
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Secondly, it is wholly illogical to impose a property tax on businesses and do away with such a tax on individuals. If there is a justification for a property tax on businesses, there must presumably be one for a property tax on individuals. Thirdly, the tax is extremely expensive ; fourthly, it is very difficult to collect. Those are the four grounds of principle. There is a fifth ground that affects only Conservative Members--the political unpopularity of the measure, and the fact that it is potentially disastrous. I understand that that is giving particular concern to my right hon. Friend the Member for Brent, North (Sir R. Boyson), and I agree that the tax is very dangerous for the Conservative party. I disagree with him and his supporters, however, in that I believe that its unpopularity flows from the four dangers and disadvantages that I have already mentioned. They are not separate from it, or an excrescence on the face of it ; this tax is innately wrong, and its unpopularity stems from that--although, no doubt, adjustments can and should be made.I welcome my right hon. Friend and his associates to our colours, although I wish that they had enlisted a little earlier, as we could have done with their help on Second Reading and in the debate on the amendment tabled by my hon. Friend the Member for Hampshire, East. My right hon. Friend's conversion is especially significant because he was in the Department of the Environment at quite a significant moment, and was very much involved in the proposals. In fact, I have a feeling that he even announced some of them himself.
That important conversion leads me to suspect that my right hon. Friend is not the only one to be converted. I cannot help thinking that, now that he is the chairman of the Conservative party, the Chancellor of the Duchy of Lancaster has also changed his mind, although for understandable reasons he cannot express his views very openly. I believe that almost every Conservative Member has been similarly converted. After all, the tax was thought up at a time when it was believed that the Labour party was completely unelectable and that the electoral consequences were therefore of no importance. In my view, the election of the Labour party is still highly unlikely, but no one can say that it is impossible. The terms of political trade have changed fundamentally, which makes the imposition of this tax a political disaster as well as something that is entirely wrong in every other way.
I believe that new Government thinking is necessary. That is not unheard of : we have had 12 or 13 different systems of local government finance since 1979, so one more would not make any difference. The only common feature of the systems so far is that each has been worse than the last. There are now grounds for optimism. Because the present one is so bad, the next one must be better.
I urge on my right hon. Friend some new thinking. For all those reasons, some of my hon. Friends and I will be unable to support him tonight.
6.20 pm
Mr. Bernie Grant (Tottenham) : My hon. Friend the Member for Dagenham (Mr. Gould) made a number of general points with which I agree and which I shall reiterate. The Government's proposals on total standard
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spending represent their assumption of what local authorities should spend to provide what they consider to be an adequate level of service.We learned today from the Secretary of State that he has not taken account of the needs element in the new system. The old needs element has been done away with because, according to the Secretary of State, it is not scientific or objective and it is difficult to quantify. Local authorities have been saying for some time that the needs element is indeed difficult to quantify, but that since it exists, it should be taken account of properly.
Ingenious formulae were devised by civil servants to try to represent the needs element in the old system of financing local government. But the Secretary of State has now done away with that element, and the Government say that they will not take account in any scientific way of what local authorities, particularly those in inner cities, need to reflect in their spending because of the situation they face.
That situation, it must be remembered, has been brought about by the Government. Their policies have caused problems for local authorities, such as unemployment, cuts in the housing programme and changes in social security benefits. Those actions by the Government have forced local authorities, particularly inner-city ones, to recognise that the needs of their residents cannot be met in the normal run-of-the-mill way of financing.
The Government have created the needs, but they now refuse to recognise them in the new formula. That is why the Government are in difficulty in squaring the situation between SSAs and the actual expenditure of local authorities, because that expenditure would be based on needs of which the Government will not take account. In the Government's figures for so-called aggregate external finance--being special grants, revenue support grant, uniform business rate and so on--we find that for 1991, the amount is put at about £23.1 billion, of which the business rate will contribute £10.5 billion, while the revenue support grant will contribute only £9.5 billion. In other words, the uniform business rate will be contributing more than the Government's revenue support grant towards local government expenditure.
Mrs. Edwina Currie (Derbyshire, South) : Why not?
Mr. Grant : The answer to the hon. Lady's question is that business people will be contributing more than the Government's major contribution towards the cost of local government services.
Mrs. Currie : Where does the hon. Gentleman think the Government get their money? Most of it comes from business.
Mr. Grant : The Government get their money from business in a number of ways, including taxes. I suspect that business people will feel injured when they discover that the Government are extracting even more from them, when the Government should themselves be responsible for that aspect of financing local government. The Government have, in effect, conned business people into paying even more towards local government finance.
The Government proportion of local government finance has been reducing steadily throughout the last decade. In 1980-81, the Government were reponsible for about 60 per cent. of local government revenue finance. In 1990-91 they will be responsible for 38 per cent. a decrease
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of over 22 per cent. in a mere 10 years. In other words, the Government have cut their support for that sector, have forced businesses to increase their share of local government finance and have forced ordinary ratepayers in local authority regions to increase their share of it.For total standard spending, the Government argue that £32.8 billion is more that adequate to pay for all the services that local authorities provide. The Secretary of State argued today that there had been an increase of 11 per cent. over the level of Government provision for 1989- 90. But the Government are not taking into account what local authorities are spending in the current year.
Officers from central and local government estimate that the real amount needed to continue present local authority policies and service levels in 1990-91, including a realistic assumption of inflation at 7 per cent., is about £35.3 billion. That is £2.5 billion more than the Government provision, as my hon. Friend the Member for Dagenham said. If the realistic figure of £35.3 billion were used, the average poll tax would rise to £348, an increase of £70 on the Government's figure of £278.
My hon. Friend the Member for Dagenham spoke of the changes in the spending assessment having a pound-for-pound effect on the amount of revenue support grant that an individual authority will receive. Where actual expenditure differs from standard spending assessment, that difference will be wholly reflected in the poll tax to be levied, and my hon. Friend mentioned a ration of 1 : 4.
Once a local authority is over the threshold of the SSA, local people will be forced to finance the expenditure of the local council. The Government will accuse any local authority which levies a poll tax in excess of £278 of being profligate, whereas the main reasons for levying such a poll tax will be that the level of Government provision is inadequate and its distribution is arbitrary.
Being a Haringey Member, I wish to discuss the effect of the new scheme on that area. It has been estimated that Haringey council will have the highest possible poll tax, in the region of £550. A reason used by the Government to justify the introduction of the uniform business rate was that it would protect business from high spending and so-called profligate local authorities. Haringey would undoubtedly be included by the Government in that classification. In 1990-91, the London borough of Haringey will collect about £57 million in rates from local businesses and others. But Haringey council will receive only £41.3 million from the national pot. That will hardly protect local non-domestic ratepayers from so-called greedy Haringey. How can Haringey be more accountable, which is said to be the object of the scheme, when it will receive less than three quarters of the business rate that it collects?
The Government determine rateable values and fix the rate in the pound which must be levied. In 1991, Haringey will lose about £20 million as a result of the switch from rates to the national business rate. In the consultation paper which was issued in November 1989, the Department of the Environment indicated that Haringey would have a standard spending assessment of £171 million approximately and would receive revenue support grant of £111 million--
Mr. Speaker : Order. The hon. Gentleman has had his time.
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Mr. Grant : On a point of order, Mr. Speaker. I thought you indicated that I had two minutes.
Mr. Speaker : The limit is 10 minutes. When the lights on the digital clock stop flashing, the hon. Gentleman must sit down. 6.29 pm
Mrs. Edwina Currie (Derbyshire, South) : I have voted consistently for the reform of local government finance, and I intend to support the Government tonight. It is a great pity that many Opposition Members, whose constituencies, like mine, stand to be substantial gainers from the reform, have absented themselves. They will not stand up and say that the reform is good, so some of us on this side have to do so.
The new system of community charge and business rate is a major improvement over the old system, which gave far too much power to local government to soak local businesses without redress. That happened a great deal in my area. It gave far too little power to ratepayers, who in some areas were a minority of voters, to control the actions of spendthrift local councils like the incompetent and inefficient idiots who are currently running Derbyshire county council.
When it comes to the community charge, in my area of the Derbyshire, South constituency the population has been growing steadily for some years and a large proportion of the people are in newly rated properties. As a result many will benefit considerably from the community charge ; I am pleased that that will be the case. The current domestic rate per hereditament in Derbyshire is £503 on average, 20 per cent. higher than the average domestic rate for comparable county councils. It is considerably more, for example, than the rate in wonderful Wandsworth, which stands at £327. The rate that my constituents have to pay per property is as high as the deprived inner-London average. By no stretch of the imagination can we say that Derbyshire is a deprived area except in so far as its unemployment is higher than unemployment in London. One reason is that for so long our rates have been very high.
The main gainers will be single elderly people. I have many people like that who live in bungalows and who are currently paying £900 or £1,000 in rates. The main losers will be families where there are several working adults, living perhaps in a terraced house. I can live with that. I can explain that to my local people and I believe that it is widely understood and accepted.
Mr. Ralph Howell : How would my hon. Friend explain to my constituent, a lady of 72, who has a total income of £2,000 a year and about £13,000 capital, that she should pay exactly the same as the most wealthy person in north Norfolk?
Mrs. Currie : First, rebates are available for many groups ; secondly, with all due respect to my hon. Friend, in my area anyone with £13,000 capital in the bank would not be regarded as poor. The message that has to go to many people in areas like mine is one that we have been trying to put across for a long time. Recently I spoke to a business club in Derby. Some business men who are not in my area but who will face high charges asked what they could do. The answer is to ask how many of them turned out last May to vote in the county council elections and support sensible policies.
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How many people did not bother to vote but stayed at home out of pique or for whatever reason? They find themselves once again with a Labour county council which is one of the most high- spending councils in the country. The message to people like that in my area, as in many other Labour areas, has to be, "If you do not come out and support sensible policies at elections, don't be surprised if you do not like the rate or the community charge that is set ; if you did not vote, then don't moan, because that is the way the system works." In my view that is right.Coming to the real gainers, business people throughout Derbyshire think that the change to the national business rate is super. They are delighted. In my area the business rate has been so high that valuations would have to go up nine times for people to pay as much. That is the break-even point for business--nine times. Most of the factories, warehouses, workshops and shops will see their valuations increase only by two, three or four times. They are set to be big gainers.
I accept entirely that it is right and proper that if we cap the losers we should cap the gainers. If my right hon. Friend ever feels like uncapping the gainers, we will be delighted. We recognise in Derbyshire that it is not just a question of politics, as the Secretary of State said. If we were to do as the Confederation of British Industry suggested--cap the losers but not the gainers--that would put £2 billion extra into the economy all at once. I understand that that would be inflationary. It seems to me odd that that is called for by the Opposition, who never normally listen to the CBI, at a time when they are saying that taxes and income tax should not be cut. Two billion pounds is the equivalent of a 1.5 per cent. cut in income tax. If it is inflationary to do that, it is inflationary also to do what the CBI suggests.
In Derbyshire my business people have given a sigh of relief and a loud call of welcome for the suggested change. We have a small number of losers. Some supermarkets in the out-of-town shopping centres, which were extremely conservatively rated in 1973, will have to pay more. Sainsbury's will be out of pocket. On the whole the supermarkets are doing very well these days and it seems right and proper that they should support the local economy.
The new system will be a big improvement. For my local business people to be on a level footing with the rest of the country is the best news that any of them could have. We do not want subsidies, regional aid or Government grants. We just want a fair crack of the whip, the same as everybody else. I hear colleagues talking about how rates in their areas will go up. Our rates will come down to their levels. Businesses in my area have been paying five to 10 times as much as businesses elsewhere.
I appreciate the concern of my hon. Friends, but it is in Derbyshire that we have the unemployment and derelict sites. We will be able to get cracking on redeveloping our areas and leading the country's resurgence in manufacturing business once again. I am delighted to welcome the reform and I look forward to seeing it in operation as soon as possible.
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6.37 pmMr. Jeff Rooker (Birmingham, Perry Barr) : I have made enough speeches about the principle of the poll tax in the past few years, so I shall confine myself to my own constituency. I want to explain, and also complain bitterly about, why Birmingham will be forced to levy a poll tax of about £410. We have been told that the average poll tax bill should be £278. The poll tax surcharge, which is called the safety net but which is not a safety net when one has to pay it, will be £69. That puts the charge up to £347. Birmingham is not a high-spending authority. In fact, it spends bang on Government guidelines. Some of us have complained that spending on social services and education has been on the low side. In 1989-90 we are spending £3 million more than the grant-related expenditure assessment of £624 million. Therefore, our expenditure is very close to the Government guideline.
The people of Birmingham will be affected by the Government's underestimate of the rate of inflation and their failure to take account of realistic pay awards. The average pay award for teachers will be 7.5 per cent. The Government's failure will cost Birmingham an extra £6 million. Changes to the debt repayment arrangement and accounting changes to the transport supplementary grant will cost the city £20 million on top of Government assessments.
How is the poll tax figure of £278 reached? Without Government grants, the city would have to levy a poll tax of £1,060 for the standard spending assessment. The joint boards add an extra £88, making a total of £1,148. If the Government grant of £870 is removed, that leaves the average figure of £278. The cost of the safety net is £69, making a total of £347. Inflation and pay awards will add an extra £9 ; changes to the debt repayment and transport grant add an extra £28 ; and other items, including the capital programme for the national exhibition centre, overspending by the police and fire brigade and growth, with which I will deal in a moment, add an extra £26, making a total of £410.
Growth is forecast to be 2.4 per cent. or, to be precise, £17 million. Growth in social services will be £2.4 million and in education £8.4 million. There is nothing in Birmingham's SSA to take account of nursery education. We have more places in nursery classes per head of pre- school children than any Tory authority in the country--we are not even the best among Labour authorities--but there is no grant for nursery education provision.
More cash must be spent on social services. Community care is a key element of local government, yet the Government have placed an impost on it. There is no question but that community care will become more expensive. Its purpose is not to save money but to improve the lives of people who can better live in the community.
On Thursday 4 January, Birmingham city council held a seminar at Council house to explain to interested parties the consequences of the community care costs. My city council is rubbished by Tory Members, yet not one of the six Conservative Members of Parliament for Birmingham attended that seminar. That demonstrates their interest in care in the community.
Mr. Roger King : The hon. Gentleman will know that we have various other commitments. I sent a letter to the
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authority explaining that I could not attend the meeting, which was held at an inconvenient time. It knows well that the best time for such meetings is Mondays and Fridays.Mr. Rooker : Yes, but Thursday 4 January was during the recess and the invitations were sent out in November. The hon. Member for Birmingham, Northfield (Mr. King) was quoted in one of the midlands newspapers last Sunday as speaking with all the authority of a former number-plate salesman who will not be able to sell the Government's poll tax numbers to the citizens of Birmingham.
Mr. Tim Devlin (Stockton, South) rose --
Mr. Rooker : I will not give way again because of the time limit. Assuming a 10 per cent. increase next year, revenue from rates in my constituency would amount to £18 million. Assuming a figure of £410, revenue from the poll tax in my constituency will amount to £29 million. My constituents will be required to pay £11 million more in poll tax than they would have paid in rates. Those figures are irrefutable ; I have checked the rateable values of 7,000 dwellings--about 20 per cent. of my constituency. Assuming that half the households were on half rebate, they would still pay £8.5 million more in poll tax than they would have paid in rates. Birmingham will collect the same amount of money--the poll tax is designed only to replace domestic rates. Who will pay £11 million less because of the additional £11 million that my constituents will pay?
The massive dislocation that that will cause to family incomes and finances does not bear thinking about. The Government have said that no one should pay more than £3 extra, which is ludicrous. For a single person in Birmingham to benefit from the transitional payments, he would currently be paying a rate bill of £92--a rateable value of £36. Nowhere in Birmingham has such a rateable value. Other households will not benefit unless their current rates are £340--a rateable value of £133. Average rates in Birmingham are £500, so few people will benefit.
The figures are fiddled. They do not take account of the reality of expenditure, of the population or of the ability to pay, which, as the Secretary of State knows, is Labour Members' central objection. There must be accountability through the ballot box and annual elections. We in Birmingham would like annual elections again, and there should be annual elections in the shires and in London for a quarter or a third of the councils. That would be one way of achieving true local government accountability. If the Secretary of State wants to improve local government accountability, he should arrange for annual elections for all councils and return to the big cities the missing year of no election resulting from the abolition of county councils.
I want to draw the House's attention to early-day motion 258 on Tory- controlled Mid-Suffolk district council. It has complained bitterly to the Minister and asked its Member of Parliament to take action. It makes exactly the same complaints as Labour Members and Labour-controlled authorities--that the Government have not taken account of the use of balances to cushion the rate levy and have not taken sufficient account of the realistic rate of inflation. Inner-city and rural areas and Tory and Labour-controlled authorities are complaining justifiably about how the Government have introduced the poll tax.
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